Oil steadied — after posting its first weekly loss since October — as pessimism over a new strain of Covid-19 that’s threatening more travel restrictions was balanced by the passage of a U.S. stimulus bill into law. Futures in New York traded near $48 a barrel after sliding 1.8% last week. Tougher restrictions were extended to much of England to try and stem the virus mutation, while American officials warned of a post-Christmas surge of infections. Japanese industrial production missed analyst expectations to come in unchanged last month from October, more evidence that the resurgent pandemic is stalling the economic recovery in some parts of Asia.

Brent has moved back into contango this month

Oil is finishing the year on a somber note as the short-term demand risk of more travel restrictions outweighs optimism over vaccine rollouts, which are already underway and will eventually boost energy demand. The OPEC+ alliance will also return 500,000 barrels a day of output to the market from January.

“I see a very quiet market from now until the end of the year, but the direction for the next couple of days will be downward” due to the new virus strain, said Howie Lee, an economist at Oversea-Chinese Banking Corp. “Since it’s nearing the year-end, traders are just happy to close their books.”
PRICES
  • West Texas Intermediate for February delivery fell 0.1% to $48.19 a barrel on the New York Mercantile Exchange as of 7:47 a.m. in London
  • Brent for February settlement declined 0.2% to $51.20 on the ICE Futures Europe exchange after closing up 0.2% on Thursday